The IMF’s steering committee adopted the position on trade taken by the Group of 20 last month in an effort to accommodate Donald Trump’s administration, which is considering how far to go in fulfilling the president’s campaign pledges to impose tariffs and reshape international accords.
A communique from the International Monetary and Financial Committee, released Saturday in Washington, said that officials “are working to strengthen the contribution of trade to our economies.” Such language echoes a statement last month from G-20 nations, which have a similar makeup as the IMF panel, reflecting the Trump administration’s call to rethink the global order for commerce.
Like the G-20 communique, the committee’s statement omits a call from its previous missive in October to “resist all forms of protectionism.” Asked about that change, Agustin Carstens, the Mexican central bank governor who serves as chairman of the IMF committee, said the statement still reflects broader agreement that nations want a level playing field on trade.
“What we try to do in these types of meetings is to strike a positive, constructive balance,” Carstens said at a press briefing on Saturday. “And the use of the word protectionism is very ambiguous.” The main goal is to take advantage of trade, and “I think everyone is in line that we need free and fair trade,” which is reflected in the communique, he said.
It’s unclear how far Trump will go in shaking up the workings of the global economy. For example, Trump backed down from a campaign promise to label China a currency manipulator this month, and proposed changes to Nafta circulated in Congress fall short of his earlier get-tough message.
Since the joint statements at gatherings such as the G-20 and the IMF require assent from members, the change in the U.S. position on trade from the Obama administration is forcing modifications in language that was previously uncontroversial.
In addition to the trade stance, the latest communique omits language from October that welcomed “the entry into force of the Paris Agreement on climate change.” Trump is contemplating whether to make good on his campaign promise to withdraw from the deal.
IMF Managing Director Christine Lagarde, speaking at the same briefing as Carstens, said the statement reflects support for her global policy agenda, which includes a call for countries to “not leave the mounting economic consequences of climate change for future generations.”
The IMF panel released the statement during the spring meetings of the International Monetary Fund and World Bank. The IMFC is the IMF’s top advisory panel, and is composed of 24 ministers and central bankers from nations including the U.S., China, Germany, Japan and France.
Some positions remained little changed. The IMFC statement reiterated pledges from October to “refrain from competitive devaluations” of currencies and to avoid targeting “our exchange rates for competitive purposes.”
The outlook for the world economy is sunnier than six months ago, with the statement saying that the “global economic recovery is gaining momentum, commodity prices have firmed up, and deflation risks are receding.” At the same time, “while the outlook is improving, growth is still modest and subject to heightened political and policy uncertainties.”
The differences in some countries’ positions on protectionism were evident in comments delivered by officials at the IMFC’s meeting.
Germany, holder of this year’s G-20 presidency, “commits to keep the global economy open, resist protectionism and keep global economic and financial cooperation on track,” Finance Minister Wolfgang Schaeuble said in his statement to the IMFC. “There is evidently a need to better communicate the benefits of trade and globalization.”
The IMFC comments from U.S. Treasury Secretary Steven Mnuchin, by comparison, don’t refer to resisting protectionism. Instead, Mnuchin said that “we will continue to promote an expansion of trade with those partners committed to market-based competition, while more rigorously defending ourselves against unfair trade practices.”
In addition, in language that could be seen as a jab at Germany — which posted a record trade surplus last year — Mnuchin said that “countries with large external surpluses and sound public finances have a particular responsibility for contributing to a more robust global economy.”
IMF Panel Adopts G-20 View on Trade as Trump Considers Options – Bloomberg